Will Blockchain Technology Finally Kill Cable TV?

Internet-based
video services like Netflix and YouTube have created significant competition
for cable TV networks in recent years. Yet they have failed to kill cable
entirely and they don’t appear poised to do so anytime soon.

Now, a
new set of video services that are built on blockchains are eyeing the cable
industry for disruption. Can blockchain-based video platforms do what Netflix
couldn’t and make cable TV a thing of the past?

Netflix vs. Cable

For
years, pundits have been predicting the imminent demise of the cable TV industry as a result of competitors such as
Netflix, YouTube and Hulu. (Hulu is a joint venture owned in part by several
major cable companies, so its existence can be interpreted as confirmation by
cable providers of just how worried they are about internet-based video
services.)

Observers
point out that streaming video services are less expensive than cable for most
consumers. They’re also more convenient because users can watch video on
demand, rather than having to orient their schedules around showtimes for
programs that interest them.

Most internet-based
video services also have the advantage of being available on any device and anywhere.
Although some cable providers offer similar features for their customers, not all
do.

Yet the
fact remains that, even though Netflix now beats cable TV companies in numbers of subscribers, the
cable TV industry shows no sign of dying anytime soon. Netflix’s
streaming video service and YouTube are both now more than ten years old, and
although they have become serious competitors to cable companies, they do not
appear capable of disrupting cable TV totally.

Several
factors have constrained the ability of streaming video companies to disrupt
the cable industry. They include:

Data
costs and limited bandwidth. Consuming large amounts of streaming video via the internet
requires a lot of data. Customers whose internet service provides limited
bandwidth may not have excellent viewing experiences. Customers may also
have to pay for the data they use to stream videos, especially on mobile
devices.

Fixed
payment models. Most
streaming video services charge a flat flee. Users pay the same whether
they watch hundreds of hours of video per month, or only a few. This
pricing model can make the services less attractive to new users, who are
unsure how often they’ll use them. Most cable plans work in the same way,
but because consumers are already familiar with cable TV and have a sense
of how much they’ll watch it, their pricing structure is not as
problematic for attracting new business.

Cable’s
response. Cable
companies have responded to the threat from Netflix and the like by
offering competing services of their own. As noted above, the Hulu
streaming video service is owned in part by cable companies. Cable
companies have also expanded offline on-demand viewing services to cater
to customers who want to watch specific shows on their schedule. These
options make services such as Netflix less attractive.

Content
control. In
many cases, cable companies own the distribution rights to the content
they make available to viewers. Companies like Netflix can’t offer the
same content. Those companies have responded by developing original
content of their own, but the fact remains that some of the content that
viewers want is not available from internet-based platforms. Content
designed for a small audience, such as local news programs, is a
particular challenge for companies such as Netflix to distribute.

Blockchain vs. Cable

Blockchain-based
video services may not be able to solve all of these challenges, but they can
innovate in ways that traditional internet-based streaming video companies
cannot.

Using a
decentralized video streaming service, such as Viewly or Livepeer, anyone can create and
distribute content with little overhead. This model empowers content producers
to generate custom content that a service like Netflix would not distribute.

For
example, a local news station might distribute its evening program via a
blockchain-based network in order to reach users without relying on a cable
network. This approach is also more advantageous than uploading videos to a
site such as YouTube, where the station would have little control over who can
view its content or how it is redistributed. Blockchain technology makes it
easy to customize the terms that govern content consumption.

A
centralized streaming video platform like Netflix requires a massive amount of IT
infrastructure.
In this way, Netflix is similar to cable companies. These costs are part of the
reason why Netflix and Hulu, which was once free but is no longer, charge for their services.

Blockchain-based
streaming video does not require such overhead. Using a blockchain and software
like Livepeer’s decentralized media server nodes, users can create the
infrastructure required to stream video using ordinary computers that they
already own. The much lower infrastructure costs associated with the blockchain
video streaming model can translate to low-cost or free video services, a major
advantage over the likes of Netflix as well as cable TV.

Due in
part to lower infrastructure costs, blockchain-based video streaming can
provide cost-efficient service. If users pay a fee at all, it can be aligned
with the amount of content they consume, rather than based on a flat
subscription rate. In addition, fees can be offset by the work that users perform
to contribute to the network; this is the model that Livepeer follows, for
example.

Blockchain
technology allows users to pay for services based not only on how much they
consume but also on how much they like what they watch. Startups like Stream reward content producers on
the basis of the number of views that their videos receive. Steemit, a blockchain-based platform
with a similar rewards model that is currently oriented around text-based
content, could be extended to support video as well.

Users
whose internet bandwidth is currently too low to support streaming video in real-time
are unable to use services like Netflix. There is no way to download a video on
Netflix over a period of time and watch it later when the download is complete.
Similarly, users who are worried about the data costs associated with streaming
content from a mobile phone while away from home cannot download content over
Wi-Fi to watch later.

Using
decentralized video distribution networks, however, consumption models like
this would be possible. Although most existing blockchain-based video platforms
are designed primarily for real-time streaming, there is no reason why they
could not also support content downloads.

To be
sure, the cable industry is safe for the time being, because most blockchain
media startups remain in their infancy. In
the long term, however, blockchain technology promises to enable a new
generation of innovation in video streaming and consumption that poses a more
fundamental challenge to the cable industry than the likes of Netflix.